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Mortgage & Housing Market News from HSH.com
April 8th, 2010

HARP: Most Underwater Getting Least Amount of Help



We’ve been receiving a lot of comments from readers who say that their lenders aren’t honoring the home affordable refinance program’s (HARP’s) expanded loan to value (LTV) ratio of 125%. (Another way to express “125% LTV” would be “borrowers who are 25% underwater.”) Based on some numbers that we found, there seems to be some real validity to their complaints.

While rooting around the web for some HARP numbers, we discovered a report from the Federal Housing Finance Agency (FHFA) that clearly shows what readers have been so frustrated about. It appears as though the borrowers who are the most underwater — the audience HARP was designed to help — have gotten the fewest amount of refinances.

Beginning on April 1, 2009, HARP allowed borrowers to refinance up to 105% of the value of their home. On July 1, 2009, HUD Secretary Shaun Donovan announced that loans with an LTV of up to 125% would now be refinanced under HARP. Federal officials concluded that by expanding the eligibility of the effort, more underwater homeowners will be able to refinance, spurring the recovery of the housing market. But has this happened?

According to a March 24, 2010 release from the FHFA (page six):

Total Refis

Fannie Mae: 144, 225 (Jan. 2010) / 2,028,710 (Inception to Date)
Freddie Mac: 107, 590 (Jan. 2010) / 1,431,353 (Inception to date)

HARP LTV >80%-105%

Fannie: 15, 519 (Jan. 2010) / 118,666 (Inception to Date)
Freddie: 14,750 (Jan. 2010) / 99, 860 (Inception to Date)

HARP LTV >105%-125%

Fannie: 626 (Jan. 2010) / 1,596 (Inception to Date)
Freddie: 717 (Jan. 717) / 1,670 (Inception to Date)

Let’s take a look at some of the comments our readers sent in:

Kate writes:

Although the Making Home Affordable program adjusted to 125 percent of loan-to-value from the original 105 percent, lenders AREN’T MAKING LOANS at that rate. I’ve talked to three or four, and they’ll only go as high as 105%. I need 120%.

Matt writes:

I have been denied a 125% LTV under HARP, but meet all of the guideline criteria. They have told me before that MI is causing my rejection and that no MI companies support HARP. Wrong – the MI company on my mortgage has documentation on their website explicitly stating their compliance with the HARP 125% LTV. When presenting this to Bank of America, they had no answer. Just simply stated that they don’t currently have a program for the 125% LTVs and that a lot of effort goes into creating a program.

Charles writes:

I am unable to get Aurora Loan Services to honor the 125% LTV refinance under the HARP. They are only going up to 95% and want me to come up with the difference. I suspect they just want me to continue paying the full amount as it works for them. Anyone able to get a Fannie Mae backed loan to honor the 125%? Anyone able to get over 100% LTV refinance?

Michelle writes:

My lender, US Bank, is honoring the 125% LTV cap. However, I have to pay out around $700 (app fee, credit report fee, and appraisal fee) before I even find out if my loan will be approved.

Lukasz Z writes:

I qualify for the 125% LTV HARP but unfortunately Bank of America has been giving me the runaround for months.

I have been in contact with 5 different representatives at BoA and every week/month it’s the same story, they do not currently support the 125% LTV HARP program and I need to call back next week or month depending who I talk to or require me to pay $50k so I can meet their 105% LTV program. They are not denying its existence, they are just not offering it. It drives me nuts how many excuses I’ve heard so far.

READERS: For anyone who has gotten a HARP refinance, what was your LTV at the time?

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30 Responses to “HARP: Most Underwater Getting Least Amount of Help”

  1. uberVU - social comments Says: April 8th, 2010 at 3:32 pm

    Social comments and analytics for this post…

    This post was mentioned on Twitter by hshassociates: HARP: Most Underwater Getting Least Amount of Refis http://bit.ly/9JMVI4 We found a report that shows what readers are so frustrated about…

  2. NickTimiraos (Nick Timiraos) Says: April 8th, 2010 at 5:49 pm

    RT @HSHassociates: HARP: Most Underwater Getting Least Amount of Refis http://bit.ly/9JMVI4

  3. HellsFargo (Hells Fargo) Says: April 8th, 2010 at 6:11 pm

    RT @NickTimiraos: RT @HSHassociates: HARP: Most Underwater Getting Least Amount of Refis http://bit.ly/9JMVI4

  4. awesomefactory (David Summers) Says: April 8th, 2010 at 6:40 pm

    RT @NickTimiraos: RT @HSHassociates: HARP: Most Underwater Getting Least Amount of Refis http://bit.ly/9JMVI4

  5. deborah_solomon (Deborah Solomon) Says: April 8th, 2010 at 7:24 pm

    RT @NickTimiraos HARP: Most Underwater Getting Least Amount of Refis http://bit.ly/9JMVI4

  6. LaurenLaCapra (Lauren Tara LaCapra) Says: April 8th, 2010 at 8:35 pm

    HARP’s in the eye of the beholder http://bit.ly/9JMVI4 (via @deborah_solomon: RT @NickTimiraos)

  7. Underwriter Says: April 18th, 2010 at 3:46 pm

    I’m a HARP certified underwriter. I have been unemployed for over 9 months. The banks, for whatever it is worth, are not interested in lending at either 105% or 125% TLTV, with MI, even if the MI companies supports the HARP program.

    That certification required over 6 weeks of training in 2009. I’ve been an Underwriter for over 15 years.

    They are also not interested in modifications under HAMP guidelines.

    To the banks, TARP was about aquisitions of failing banks, not unfreezing the credit markets or lending to the consumer. It was about having extra money to buy the “fire sale” of other banks going under. Until this issue is adddressed, don’t look for lenders to apply HARP or HAMP as a solution to the economic fallout.

  8. Tim Manni Says: April 20th, 2010 at 12:43 pm


    Wow, thanks for sharing that info — I’m sure you’ve reaffirmed what many readers were thinking. Thanks again,

  9. Kevin Says: April 27th, 2010 at 2:51 am

    How is it even legal for these loan servicers and banks to not honor a government mandated program as backed by Fannie Mae and Freddie Mac? If Fannie Mae says you can qualify for HARP at 125% then how do the banks have any say in this to not honor it? If Fannie Mae is who bought, or backs, your loan then that is that. They are the one taking on any associated risks by backing said loans, and the banks/servicers will get fees and commissions from the government TARP for processing the loan. Can someone explain to me how this is at all possible? It’s almost like the government saying you can vote once you are 18 years old, but come election day the polls tell you that they are not honoring 18 year old voters, but you can vote if you’re 21, and so on!

  10. Tim Manni Says: April 28th, 2010 at 10:10 am

    Hey Kevin,

    It’s not that it’s legal or not legal, as you said, it’s based on Fannie and Freddie-owned loans. That being said, borrowers still have to qualify. Granted, this program hasn’t been implemented as fast or as swiftly as hoped, but borrowers still need decent credit, full documentation and a manageable amount of debt load.

    Thanks for commenting,

  11. Colin Nguyen Says: June 14th, 2010 at 2:37 pm

    125% program and also MI… insight from a professional

    Reading all these posts let me enlighten by discussing the HARP program.

    although the HARP program goes up to 125% most lenders do not offer the 125% progam and instead max out at 105%. It is up to the discretion of the lender/investor what matrix and cap they want to go up to.

    I am a broker in California and I’ve funded a few 125% HARP loans but there are only 2 current lenders offering this program. If you are interested than contact me at colin@trojanhomeloans.com

    MI: Loans with MI do not qualify for HARP at the moment. All the lenders specifically state that they dont have HARP programs for loans with MI. Your MI company may say their MI is compliant with HARP, but they have no say in what the lenders choose to do. And as of June 14, 2010, there are still NO LENDERS I am aware of that are doing loans with MI. MI loans are offered up to 95% LTV but not via HARP.

    Currently Fannie Mae has not unleashed a HARP DU Refi Plus prgram with MI, though they have hinted for a year now that they might.

    I hope this clears all the confusion from above. Most of your lenders, BofA Wells, Chase do not offer either the 125% or the MI HARP program. If you wish to know how to get a 125% fannie mae DU Refi Plus loan, just contact me.


  12. Tim Manni Says: June 15th, 2010 at 12:31 pm

    That’s great Colin, thanks.

  13. Tim Manni Says: June 15th, 2010 at 12:35 pm

    Thanks Colin. You know for sure that only two lenders are offering the 125% LTV refi? This is great info that would make for a great post. Where did you read about this?

    Look forward to hearing from you,

  14. Brooke Says: June 28th, 2010 at 7:54 pm

    I have contacted Aurora several times about a Fannie backed 125% HARP but have been told they have “not been approved for those loans yet”. It seems like a load of crap to me. The gov website says they are required to participate, so why don’t they have to? Isn’t there any recourse we can take? The gov’t sets up a program, according to everything I have read, I qualify for the program but my lender is giving me the runaround. This has been since Sept. of last year, there is no way it is really taking this long. I am worried the program will run out before we have a chance to re-fi.

  15. Tim Manni Says: June 29th, 2010 at 9:43 am


    I’m hearing more and more that lenders aren’t refinancing loans with LTVs that high, even though Washington gave them the option. I don’t believe lenders are required to participate in HARP, I know that those who took TARP money are required to participate in HAMP. I would contact other Fannie lenders to see if anyone is refinancing loans with such a high LTV.

    Thanks, keep me posted,

  16. Karyn Says: July 14th, 2010 at 10:15 pm

    I know Flagstar will do a DU Refi Plus up to 125% but only if your loan originated with them and they are still servicing he loan. My LTV is 113% and Flagstar conveniently sold my loan to another lender within a couple of weeks of implementing the program. Flagstar will only go to 105% now since my loan is serviced with someone else. Other than the LTV I qualify. I guess the lenders can decide whether or not they want to go up to 125%. I wonder why the government doesn’t insist that these lenders implement the 125% program. After all, they used my tax dollars to bail them out. It’s frustrating. All I’m asking for is a lower rate.

  17. Tim Manni Says: July 19th, 2010 at 10:26 am


    Thanks for commenting. Keep us posted,

  18. Rita Says: September 23rd, 2010 at 11:41 am

    After reading all comments, I guess a person with a convential loan is totally out. You would think with a 800 plus credit score they would want a borrower like that. All I want to do is lower my payments.

  19. Barry Says: October 19th, 2010 at 4:54 am

    I qualify for HARP but GMAC will not honor it because they say that West VIrginia will only allow a 100% LTV and not allow the 125% which HARP allows. I am upside down about $25000 or roughly need 115% loan. I have been denied a loan modification because I am current on my loan. I have an interest only ARM at 6.9% and can’t refi or even sell my house because of this situation. They did modify my second dropping it from a 9% to a 5.385 % rate but wont do the 1st. They say because I am current I obviously dont need it and because I live in WV I cant get a HARP loan either!! Can anyone help me???


  20. Tim Manni Says: October 19th, 2010 at 8:30 am

    Hey Barry,

    Unfortunately we’ve heard this before. Current borrowers, deeply underwater borrowers, and even borrowers with specific products all have had trouble refinancing through HARP. This doesn’t leave you with many options, I know. What I haven’t heard before is the claim that one state won’t allow a condition set forth under a Federal program. When I’ve heard about borrowers not being able to refi up to 125%, it’s usually b/c the lender chooses not to, not the state. Once again, current borrowers who are only looking to continue doing the right thing can find zero assistance. I just wish that Washington would look further into our solution we designed for underwater borrowers (http://library.hsh.com/articles/refinancing/ValueGapRefi.html).

    If you think our underwater refi plan makes sense, tell your Congressman about it!

    Thanks for your comment, best of luck and keep us posted,

  21. Barry Says: October 19th, 2010 at 8:48 am

    where can I find out if this is real or not? I am wondering if WV really does not allow 125% or not??

  22. Tim Manni Says: October 19th, 2010 at 9:14 am


    Here’s the thing, just b/c HARP is a national program, it doesn’t mean it will supersede state law. Some states created limits at which borrowers could leverage themselves. For example, some states wanted to prevent people form over leveraging themselves, so they made it illegal to borrow at 125%. While you didn’t originally borrow that high, your new equity position (thanks to falling home prices) may at that underwater level.

    I would suggest you check this out in two place: your state’s Housing Finance Agency and your state’s banking department. Here’s a link to a list of all the state housing finance agencies: http://library.hsh.com/read_article-hsh.asp?row_id=63

    Hope this helps you get to the bottom of your issue. Please let me know if you have anymore questions, or if I can continue to be of assistance, thanks,

  23. Barry Says: October 19th, 2010 at 12:36 pm

    Why would they modify my second and not the first? You would think that because the second was a fixxed rate and the first is an interest only arm, that they would have done the first first. It makes no sense to me why they would approve the second and say that since I was current they didnt need to do the first. Are they wanting people to be behind?? Do I now have any recorse??

  24. Tim Manni Says: October 19th, 2010 at 5:04 pm


    I’m confused, are we talking talking about a HAMP modification, or a HARP refi? There’s so little help out there for current borrowers — that’s a big part of the problem, there’s no encouragement for borrowers to continue to do the right thing.

  25. Barry Says: October 19th, 2010 at 8:37 pm

    I was saying that I had origially applied for a loan modification on both my first and second. They modified the second but denied me on the the first saying I was current and therefore didnt need help,lol. I then appled for a HARP Refi and was denied because I am upside down on my mortgage and WV supposedly wont go over 100%.

  26. Tim Manni Says: October 20th, 2010 at 9:38 am


    See, this is what gets me so frustrated about these housing preservation programs created by Washington — there seems to be any number of loopholes for servicers to say people don’t qualify. Here’s a direct quote from the FAQs on MakingHomeAffordable.gov (http://makinghomeaffordable.gov/borrower-faqs.html#4):

    “Eligible homeowners who are current on their mortgages but have been unable to take advantage of today’s lower interest rates because their homes have decreased in value, may now have the opportunity to refinance.”

    As far as HAMP goes (according to MakingHomeAffordable — http://makinghomeaffordable.gov/borrower-faqs.html#22), you don’t have to be behind on your mortgage to qualify, but you “reasonably believe [you] are very likely to default on their mortgage soon”…

    Have you checked in with your state’s Housing Finance Agency or banking department?


  27. Aimee Says: February 19th, 2011 at 4:37 pm

    We have been trying to refinance for almost 3 years now through Wells horrible Fargo. Finally over 2 months ago we went through Fannie Mae who is recommending they give us HARP (we don’t have PMI, 790 credit no seconds etc etc.) and they keep giving us the run around and basically DON’T WANT TO DO IT. Our Fannie Mae counselor is now emailing them back to say to do it.
    These banks are so corrupt they make me sick.

  28. Peggy Says: July 3rd, 2011 at 10:10 pm

    I have thought about not doing the right thing and just letting my house go. Seems it’s the way to go. A lot of people just walked away without thinking twice about it. Why are lenders such jerks? Difficult to find anyone to just help you lower the payment and ease some of the financial crap we have to deal with everyday. Every thing goes up, gas, good, utilities, etc. But is there a pay increase? I work for the schools and haven’t had a pay raise in 4 years. I keep juggling the increasing costs of bills but it’s really getting hard to stretch those dollars!

  29. Tim Manni Says: July 8th, 2011 at 10:24 am

    Hey Peggy,

    I think a lot of Americans are in the same position you are. It’s really tough: costs keep rising but paychecks stay the same. Walking away from your home is certainly a business decision, but you must know it doesn’t come without consequences. You won’t be able to own a home for about seven years, your credit could tank and your lender could possibly come after you for what you still owe. Think long and hard before you decide to walk.

    Thanks so much for your comment, good luck and keep us posted,


  30. Sulynn Says: December 15th, 2011 at 10:26 am

    I am not sure if you are aware that there is a revised HARP program that was to be implemented on December 1st. Well, I applied to refinance under the HARP program in early October. Waited, waited, and waited. Called several times and was getting the run around that it could take 8-12 weeks. I got two letters stating that I didn’t qualify for a modification, but that is not what I was applying for. They told me to wait until December 1st, because of the changes made to HARP. Now they are telling me to wait until March, since most lender application systems can’t handle the new rules that HARP has in place. Also, they first told me that my PMI is calculating too high. I was like, PMI? I put 20% down on my home at purchase and in order to refinance I have to pay PMI.. what’s the point of doing a refinance. Like Peggy, I am a single parent with an autistic son, I drive over 50 miles to work each day and gas keeps going up. I can’t sell to move closer to work, and really struggle to make the mortgage payment each month. Now, the tolls are going up double, insurance premiums are going up $100 a month next year and my credit card is at it’s limit. If I can’t get this refinance then there may be another foreclosure added to the list. I am trying but at the end of the rope.

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HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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